Insurtech investment on a $6 billion pace

A handful of large insurtech funding rounds have pushed the money in the sector to a new level.

That's according to Hampleton Partners' insurtech M&A market report, which covers funding in addition to buying and selling activity.

While the number of M&A deals has stayed at about 25 per half-year for several years, fundraising deals were growing steadily up until this year, including a 27% jump from 2017 to 2018. However, the 108 funding deals reached in the first half of 2019 paces out to 216, which would be only 14 more than than 2017 and a drop of 40 from last year.

Tomohiro Ohsumi/Bloomberg

But though deals are fewer, the dollar amounts associated with them are greater than ever. The $3 billion raised so far this year would be the second-most on record if the year was already over, Hampleton found. In 2018, fundraising deals were valued at $4.2 billion.

"This reflects the maturation of fintech unicorns; rising valuations; higher burn rates, as sophistication and market penetration advance; and the resulting need for significant capital," the report says. "There is also evidence of a growing shift towards financing larger deals, as the 'spray and pray' approach to venture funding (including from insurance and reinsurance industry investors) has dampened significantly due to poor returns... In contrast, 2019 has demonstrated an improvement in investment returns, with a greater concentration of VC funding being funnelled into larger- and higher-valuation deals that have already shown success."

Leading the charge in insurtech investment is Softbank, which has invested nearly $700 million alone in insurtechs including Lemonade, Collective Health, and Policybazaar.

On the M&A side, the 30 deals so far in 2019 are in line with historical averages. The two leading buyers in the sector are Verisk, which has made six acquisitions in the past 30 months; and iPipeline, which has made five. No other company reports more than three, according to Hampleton.